TNAG-1172-FCO40-1453-Future-of-Hong-Kong-1982 — Page 76

GRS 900

SECRET

FM HONG KONG 190325Z JUN 82

TO PRIORITY FCO

SECRET

TELEGRAM NUMBER 647 OF 19 JUNE

INFO PRIORITY PEKING ( PERSONAL FOR AMBASSADOR)

PERSONAL FOR DONALD.

FROM GOVERNOR.

FUTURE OF HONG KONG

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Ame~416

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PARAGRAPH 4 OF CLIFT'S TELELETTER OF 8 JUNE

REPORTED THAT THE

SECRETARY OF STATE HAD ASKED WHETHER WE SHOULD CONSIDER DISCUSSING

THE FUTURE WITH THE CHINESE BEFORE THE PRIME MINISTER'S VISIT. IN MY

VIEW SOME PREPARATION WILL BE ESSENTIAL IF WE ARE TO MAKE THE MOST

OF THE OPPORTUNITY PROVIDED BY THE VISIT, AND AVOID THE CHINESE BECOMING COMMITTED TO AN UNREALISTIC POSITION

2. THE FOLLOWING CONSIDERATIONS ARE RELEVANT:

(A) THERE IS MOUNTING EVIDENCE THAT THE CHINESE HAVE TAKEN SERIOUSLY OUR REPEATED WARNINGS THAT CONFIDENCE IN HONG KONG WILL BEGIN TO SLIDE WITHIN THE NEXT TWO YEARS OR SO UNLESS SATISFACTORY ARRANGEMENTS FOR THE FUTURE ARE MADE: AND THAT THEY ARE NOW DEVOTING SERIOUS THOUGHT TO THE FORM WHICH THESE ARRANGEMENTS SHOULD

TAKE. I DOUBT IF THEY HAVE ALREADY REACHED FIRM CONCLUSIONS: THE SOUNDINGS OF HONG KONG OPINION NOW IN PROGRESS, THE FACT THAT DENG PUT HIS THOUGHTS TO MR HEATH IN THE FORM OF AN ENQUIRY, AND THE STUDIES APPARENTLY BEING UNDERTAKEN BY SUCH BODIES AS THE CHINESE ACADEMY OF SOCIAL SCIENCES SUGGEST THAT THEIR IDEAS ARE STILL AT THE FORMATIVE STAGE.

(B) WHAT WE KNOW ABOUT THESE IDEAS (FROM DENG'S MEETING WITH MR

HEATH, HUAN XIANG'S REMARKS IN AUSTRALIA ETC) IS NOT ENCOURAGING. THE BASIC ELEMENTS OF THE CHINESE POSITION ARE CLEARLY THAT CHINA'S SOVEREIGNTY MUST BE SAFEGUARDED (OR RECOVERED) AND THAT HONG KONG" PROSPERITY MUST BE PRESERVED. BUT THE CHINESE HAVE APPARENTLY NOT YET UNDERSTOOD THAT CONFIDENCE WHICH IS ESSENTIAL TO PROSPERITY, IN TURN DEPENDS ON BRITISH ADMINISTRATION.

(C) THE FIRST WAVE OF VISITS BY PROMINENT CHINESE BUSINESSMEN TO PEKING, INCLUDING THE LEADING BUSINESSMEN MOST LIKELY TO BE CONSULTE IS NOW OVER. FEW SHOWED INTEREST IN TALKING TO US BEFOREHAND ABOUT THE LINE THEY INTENDED TO TAKE. FROM SUCH DEBRIEFING AS WE HAVE BEEN ABLE TO DO, IT IS PLAIN THAT NO-ONE HAS HAD THE COURAGE TO TELL THE CHINESE EXPLICITLY THAT CONTINUING BRITISH ADMINISTRATION IS FOR THE FORESEEABLE FUTURE ESSENTIAL TO CONFIDENCE IN HONG KONG. (D) THE CHINESE ARE CLEARLY PREPARING FOR SUBSTATIVE DISCUSSIONS DURING MRS THATCHER'S VISIT. THEY ARE THEMSELVES PUTTING OUT FEELERS FOR INFORMAL TALKS IN ADVANCE OF THE VISIT. IN ADDITION TO ZHANG WENJIN'S OFFER TO MAKE HIMSELF AVAILABLE TO SIR P CRADOCK AT ANY TIME (PEKING TELNO 306), WE HAVE HAD AN INDIRECT MESSAGE TO THE SAME EFFECT FROM LIAO CHENGZHI, DIRECTOR OF THE HONG KONG/MACAO OFFICE) TRANSMITTED THROUGH A LOCAL BUSINESSMAN WHO HAS CLOSE QUASI-FAMILY TIES WITH LIAO, AND REINFORCED TO THE SAME BUSINESSMAN BY LI JUSHENG, THE 2ND NCNA DIRECTOR WHO HAS

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